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International Journal of Marketing and Technology Vol. 8 Issue 9, September 2018,
ISSN: 2249-1058 Impact Factor: 6.559
Journal Homepage: http://www.ijmra.us, Email: [email protected]
Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial
Directories Indexed & Listed at: Ulrich's Periodicals Directory ©, U.S.A., Open J-Gage as well as in Cabell’s
Directories of Publishing Opportunities, U.S.A
1 International Journal of Marketing and Technology
http://www.ijmra.us, Email: [email protected]
Factor influencing customer’s Loyalty towards
Indonesian Graphic Design Company
Denny Hartanto*
Chapter 1 : Introduction
The research focused mainly about the customer’s loyalty in graphic design company. First of
all, the background of the study will be focused on the factor that influencing customer’s loyalty
on graphic design company. The study will located in Indonesia (Medan city).
1.1 Research Background
Loyalty can be defined as customers who continue to believe that your organization's product /
service offer is their best option. It best meets their value proposition. They take the offer every
time faced with the purchase decision (Kay Ranade, 2012). This research study focus to
determine the factors that affect the quality of service, reputation, trust, satisfaction, and price to
customer loyalty that impact on increased sales in the company Graphic Design Indonesia
(Medan city).
1.2 Problem Statement
There is only one problem in this research study actually, “what does make customer not
loyal to a company?”
1.3 Research Question
Research questions for this research study have been developed after investigating the problem is
as follows:
A. How positive and significant Reputation would influence on customer loyalty?
* Limkokwing University of Creative Technology,Malaysia
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B. How positive and significant Percived Value would influence on customer loyalty?
C. How positive and significant Service Quality would influence on customer loyalty?
D. How positive and significant Trust would influence on customer loyalty?
E. How positive and significant Satisfaction would influence on customer loyalty?
1.4 Research Objectives
The objectives of the research are as below:
A. To investigate whether reputation has a positive and significant influence on customer
loyalty
B. To measure whether perceived value has a positive and significant influence on
customer loyalty
C. To examine whether service quality has a positive and significant influence on customer
loyalty
D. To analyze whether trust has a positive and significant influence on customer loyalty
E. To identify whether satisfaction has a positive and significant influence on customer
loyalty
1.5 Significant of the Study
The study is usefull for the graphic design company in mainting or developing the customer
loyalty to the company. The management and organization can learn and concern on the lacking
factors that might be a problem for the level of customer loyalty. By understanding the important
factors for customer loyalty, the organization could make customer loyalty aspect as one of their
competitive advantage strategy for their achievement in graphic design company. Besides, the
study also would help a graphic design company to add up the number of existing customers.
Moreover, a good relationship also can be created from this study. When the factors are taken
into concern, the operation of the company also can be improved than before. Last but not least,
it also fulfill the requirement of my assignment for this semester.
1.6 Scoop of the Study
This study start from chapter one, which is first will explain about the introduction of the
study. There are research background, research problem, research question, and last is the
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research objectives.
Chapter two, will explain about the literature review that related to the similar study
about customer loyalty, reputation, service quality, and perceived value.
Chapter three will be explain about the research model that suggests the integrative
interrelationships among the research constructs in which it includes reputation, service quality,
perceived value, and customer loyalty.
Chapter four will describe the results of pre-analyzed data screening (assumption of
normality and regression test), reliability test and instrument validity assessment
Chapter five is explaining about the conclusion of the findings, and the result outcome solution
for the study. And at the end of this chapter will be explain about the research limitation and
recommendation as well.
Chapter 2 : Literature Review
2.1 Introduction
This chapter will review the literature for the six variables which are customer loyalty,
reputation, customer satisfaction, perceived value, service quality and trust. First of all, the
definition and the theories of dependent variable, customer loyalty will be discussed, followed by
the definition and explanation about the independent variable. After the definition for each
independent variable is been highlighted, the relationship between the customer loyalty and that
independent variable that been discussed above will be further detailed.
2.2 Customer Loyalty
Loyalty can be defined as the attitude or behaviour of a customer in using the same product or
brand or stay with the same service for a longer period of time. For instance, in banking indutry,
the attitude of staying with one bank is what meant by loyalty of a customer. There are many
ways that be used to measure the loyalty of a customer. Loyalty can be defined as a customer
continuing to believe that your organization’s product/service offer is their best option (Kay
Ranade, 2012). This term is influenced by many factors that can be identified as well as
unidentified factors that might influence a person.
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2.3 Reputation
Reputation has a very huge impact on every aspect of the business and career. It is not only a
good reputation will ensure the client must listen to the company, it will also increase the
chances of winning the job. If the client already seen the work that the company done, and heard
about opinion and the company is recommended, then it will make a world of difference. In fact
it will allow the company to skip the competitive bidding processes.
2.3.1 Relationship Between Reputation and Customer’s Loyalty
Reputation Company is recognized as one of the main factor for the customer loyalty.
Prospective customers will understand the idea of the company from their advertising and other
sources like mouth to mouth from every existing customers. Building a strong company is more
important in the organization service contexts that not offer the real product to the customers.
The importance of corporate reputation for the service industry is more important than that of
delivering real products, Tang and Weiwei (2007).
2.4 Customer Satisfaction
Customer satisfaction can be defined as the feeling of pleasure or dissapointment that
leads from comparing a product’s outcome in contract with their expectations (Kotler, 2000).
Satisfaction plays a very important role for loyalty. Satisfaction is level of happiness of the
customer. Besides, satisfaction comprises of the feelings of accpectance, happiness, relief,
excitement and delight (Maclnnis, 2001).
2.4.1 Relationship Between Customer Satisfaction and Customer Loyalty
Relationship satisfaction exclusively reflects customer satisfaction with the relationship is
different from the customer’s satisfaction with theoveral exchange (palmatier et al. 2006). It is a
comprehensive assessment of the strength of the relationship, “and the perception as a multi-
dimensional construct that captures the many different aspects of the relationship of exchange
(De wotl, Odekerken-Schoder, and Lacobucci, 2001).
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2.5 Perceived Value
Perceived value is the value that a customer give for a product. In general, price ceiling is the
role of the relative perceived value which a product gives in the marketplace. Besides, the
customers will also think of the perceived price where they will calculate on how much the cost
will be. Price may vary perception of one individual to another. Sometimes, the highest price that
may adversely affect the consumer’s decission to buy (Ping and Wang, 2006).
2.5.1 Relationship Between Preceived Value and Customer Loyalty
The previous literature has showed that perceived value has affected customer loyalty (Dodds et.
al., 1991; Grewal et. al., 1998; Voss et. al., 1998). When the perceived value is higher, the
customer will tend to be loyal and vice versa. Anderson et. al, (2007) give suggestion that when
the perceived value is low, customers will be more intend to switch to competing businesses in
order to increase the perceived value, thus it will contribute to a drop in loyalty. Relative
perceived value is the important concept involved in perceived value. The customer will tend to
change to the competing product when the perceived value reduces, in order to increase the
perceived value which then, reduce the loyalty level ( Anderson & Srinivasan, 2003). However,
the investigation done for golf traveller market which states that the perceived value predicts
customer loyalty, it was found that it is not predictive (Petrick & Backman, 2002). Same case
goes to the study by Omar et. al. (2007) who stated that perceived value is not the predictor of
customer loyalty in retail market.
2.6 Service Quality
Service quality defined as an attitude or judgment relating to the overall excellence or superiority
of the service. Also, it expressed as a difference between expectations and perception of a
customer regarding service performance. Service quality is a comparison between customer
expectation with the service they perceive to have the received. In another word, service quality
defined as a tool that evaluate the gap between expectations and perception of a customer. The
impertance of the service quality in this era of fierce competition cannot neglect (Gronroos,
2007).
2.6.1 Relationship Between Service Quality and Customer Loyalty
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Service quality is one of the major factor that influences loyalty of a customer. When the
service provided by the graphic design company is bad or does not fulfill their customer’s
expectation, they might not remain with the same company and later, they will divert to other
company that provide a better service for them. According to Raymond & Rylance (1995),
empathy is the important aspect in service quality in order to create a long-term relationship.
2.7 Trust
There are two kind of level trust, the customer trust in one particular sales special at the first
level, while trust at the institution is on the second level. If the trust come out, then it’s clear that
people will buy something (Rauyruen and Miller, 2007). Trust is a belief in the reliability. In
other word, it is one party expectation that other party will behave in a certain predictable way in
a given situation . If the other party doesn ́t behave in an expected way , then the trusting party
(customer) will face the more negative situation.
2.7.1 Relationship Between Trust and Customer Loyalty
Trust is a factor of intervention that significant between the behavior of customer before and
after purchasing a certain product. In this research, it concerned with the direct effect from trust
and satisfaction, as a part from reputation of customer loyalty. The most common trust that
founded is two dimension. First dimension is related to the credibility of other partners in
objective terms, include the honest attribute, reliability, and keep the promise. The other
dimension consists of kindness that is the natural intention to meet their needs and wants from
another partners (Doney & Cannon 1997).
2.8 Hypothesis
According to this research, the conceptual model is developing as mention above, included the
“independent variable” (IV) which is the five factors affecting customer loyalty for local graphic
design company in Medan and customer loyalty as “dependent variable” (DV). The
questionnaire is one form of general reporting technique that uses the most universal tool for
gathering beliefs and attitudes (de Vaus, 2002; Malhotra et al. 1996).
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Chapter 3 : Research Methodologies
3.1 Introduction
Methodologies are the ways that are taken to conduct this research or study. There are many
ways that can be undertaken for a research. The population and sample for the study also will be
explained which then leads to a questionnaire design. The question design will also shows the
techniques used to design the question that relates to the objectives and also the hypotheses of
this study.
3.2 Research Model
Based on the research, a conceptual model was developed as above, it includes the Independent
Variables (IV) which are the five factors that influence customer loyalty to graphic design
company in Indonesia (Medan city) and customer loyalty as the Dependent Variable (DV). For a
detailed and specified study purpose, only three relationship will be considered and discussed for
this study.
Figure 3.1 Research Frame work
3.3 Data Collection
Data will be collected from several sources which includes primary data and also
secondary data. Primary data is the data that are collected by first hand which means it is not
amended by any other source or people. The primary data which gathered for this study is by
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questionnaire, and by observation method. Communication method is to investigate on the
loyalty of the customers and the feedback from the customers for all the factors that might
influence them.
The secondary data is the information that are collected from existing source which are the
existed data. Secondary data is as important as the primary data too, this is to find out the
theories that the previous studies apply and also to make each statement for the research.
Previous studies are important and helpful as to understand a situation occured or that might
occured.
3.4 Questionnaire Design
The questionnaire is designed according to the objectives and also the research question
in order to collect an accurate and precise information for the study as well as to evaluate the
hypotheses made. The questionnaire will be designed as a scaled response survey which uses the
format of Likert scale where the questionnaire consist of rates 1-5. This design would be the
most suitable for analysing the level of loyalty among the customers. The advantage of Likert
Scale is that it can produce a scale that has a good reliability and validity (Bearden & Netemeyer,
1999; Blankenship et. al., 1998; Churchill & Peter, 1984).
The questionnaire item are developed as below:
Table 3.1 Measurement questionaire
Variable Measurement Itmes
Service Quality
Author:
Cristobal et al.
(2007)
Website Shown
1. The products/service and its futures are correctly
presented in the graphic design company website
2. The graphic design website information is regularly
updated
3. The graphic design website pages load quiclkly
4. The contents are easily found in the graphic design
website (ease of navigation)
5. The graphic design website provides full information on
product features and services offered
Customer Service
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1. When the graphic design company provider promise to do
something within certain time, they do it
2. When customer has a complaint or grievance, it is dealt
with rapidly and effectively
3. The graphic design company sevice is the performed
properly first time
4. The stated delivery product period is adhered, at the time
agreed on
Order Management
1. Time given to customer to modify and or defer to the
design
2. The graphic design website contains information on
product service availability when dealing
Preceived Value
Author: Lin and
Wang (2006)
1. The product or service of graphic design company is good
value for money that customer pay
2. The price or fee charge of the product quality is acceptable
3. The product or service of the graphic design company
considered to be a good deal or buy
Trust
Author: Lin and
Wang (2006)
1. Based on my experience with graphic design company
provider in the past, it is honest.
2. Based on my experience with graphic design company
provider in the past, cares about customers.
3. Based on my experience graphic design company provider
in the past, it is not opportunistic.
4. Based on my experience with graphic design company
provider in the past, it is predictable
5. Based on my experience with graphic design company
provider in the past, it knows its market.
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Customer
Satisfaction
Author: Bielen
and Demoulin et
al. (2007)
1. The graphic design company provide a good satisfation
for the customer
2. The graphic design company give a fast respond through
social media to customer
3. The grapic design company provide a friendly customer
service to service every customer
4. The graphic design company provide a good service and
affective aspects of waiting
Reputation
Author: Casalo
et al. (2008)
1. This graphic design company has a good reputation
2. This graphic design company has a good reputation
compare to other graphic design company
3. This graphic design company has a reputation for offering
good service
4. This graphic design company has a reputation for being
fair in its relationship with its customers
Customer
Loyalty
Author: Lin and
Wang (2006)
1. My preference for this graphic design company would not
willing change
2. It would be difficult to change my beliefs about this
graphic design company
3. Even if friends or other people recommended another
graphic design compnay, my preferences still for this graphic
design company would not change
4. I will deal from this graphic design company next time I
need the service or product
5. I intend to keep dealing and using the product with this
graphic design company
3.5 Population
The population for this study, most of it are the customers from graphic design company that
already mentioned above. The population is more focused to the customers of graphic design
industy only. The population is very wide at Indonesia, however, only a number will be taken as
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sample for the study. Medan is the capital city of North Sumatra, Indonesia. He is the largest city
in Sumatra, as well as the 3rd largest in Indonesia after Jakarta and Surabaya. Medan city has
one of the high number of population, whereby it is 2,210,624 in 2015 according to the
Department of Statistics and Population Cencus of Indonesia. The number includes the non-
Indonesian citizens as well. Most of the population of Medan comes from the age group 0-19 and
20-39 years (41% and 37.8% of the total population respectively). Judging from the age structure
of the population, Medan occupied approximately 1,377,751 people of productive age, (15-59
years). Furthermore, seen from the level of education, the average length of school population
has reached 10.5 years. Thus, there is relatively sufficient labor available, which can work on
many types of companies, services, trade, and manufacturing industries. The number of
population might be plus or minus for the year of 2016 but the estimation is made to
approximately 500.000 population.
3.6 Sampling
The sampling procedure adopted in this study for data collection is a “convenience-sampling”
method through a questionnaire survey. Convenience-sampling is a statistical method of drawing
representative data by selecting people because of the ease of their volunteering or selecting units
because of their availability or easy access.
Overall, out of a total of 150 questionnaires distributed during the one-month data collection
period, there are only 140 valid questionnaires that can be used for further analysis after
excluding inexperienced graphic design customers. This is a response rate of 82.5%, which is
still sufficient to arrive at the desired and expected achievement of this study compared to other
similar studies previously involved.
3.7 Data Analysing
The questionnaire colleted from the respondant will be rated by scale of 1 to 5 using
likert scale and it is be analysed using one of the computer software which is Statistical Package
for Service Solution (SPSS). This SPSS sofware need the data collected from questionnaire to be
numerically coded. Therefore, each of the questions is coded with a number for the data input for
analysing purpose. The decriptive statistics as well as the frequency table has been executed.
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Then, the reliable analysis for all the items involved in each variable were tested. Moreoever,
correlation and regression analysis have been performed. The outcomes produced from the
analysis will be discussed in detail in Chapter 4 of this study.
Chapter 4 : Data Analysis and Findings
4.1 Introduction
The chapter will is considered the important ones for a research where this chapter will
discusses about the results of the overall research done. The results and analysis for the entire
sample of 152 respondents will be highlighted here.
4.2 Descriptive Statistics of Data Collection
Exploration of data is made under descriptive statistics, in which data summary and
descriptions are made (Coakes & Steed, 2007). Descriptive statistics will only be conducted for
the purpose of observation and for the demographic part of the data collected. There are eight
demographic items related to the study and each item will be tabulated in statistical form as how
it is analyzed through SPSS software.
4.3 Central Tendencies Measurement of Constructs
The normality test is to test whether the data is normally distributed. Means represents
the average response of the data while the standard deviation represents the dissemination of data
from the mean (Kline, 2005).
4.4 Reliability Analysis
A test that is conducted for both consistency and stability is how reliability is measured
(Cavana et. al. 2001Cronbach’s alpha is a reliability coefficient, which will indicate whether the
items in the set are positively correlated to one another, or not. Furthermore, Cronbach’s alpha
tells about the inter-correlations among the items that are kept as one concept or variable. The
coefficient will range from the value of 0 to 1.
According to the below-mentioned table, the Cronbach alpha coefficient for each variable is
acceptable and this indicates that each item in all variables and even three dimensions of service
quality are related to each other. Quality of service has the highest level of reliability (0.904)
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while the perception value has the lowest (0.737). The coefficients are all 0.70 and above,
therefore each item can be correlated to each other.
Table 4.1: Summary of reliability test statistics
Item No. of items Cronbach’s Alpha Coefficient
Customer Loyalty 5 0.783
Reputation 4 0.784
Service Quality: 11 0.904
Perceived Value 3 0.737
Customer Satisfaction 4 0.831
Trust 5 0.752
4.5 Correlation Analysis
Table 4.2: Pearson Correlation Analysis
Correlations
MLOY MREP MSQ MPV MTRU MSAT
MLO
Y
Pearson
Correlation
1 .730**
.714**
.695**
.648**
.680**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 152 152 152 152 152 152
MREP Pearson
Correlation
.730**
1 .704**
.693**
.565**
.558**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 152 152 152 152 152 152
MSQ Pearson
Correlation
.714**
.704**
1 .667**
.527**
.514**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 152 152 152 152 152 152
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MPV Pearson
Correlation
.695**
.693**
.667**
1 .596**
.616**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 152 152 152 152 152 152
MTRU Pearson
Correlation
.648**
.565**
.527**
.596**
1 .478**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 152 152 152 152 152 152
MSAT Pearson
Correlation
.680**
.558**
.514**
.616**
.478**
1
Sig. (2-tailed) .000 .000 .000 .000 .000
N 152 152 152 152 152 152
From table 4.2, the highest coefficient value shown is 0.730 ", which is lower than 0.9 and it
shows that all independent variables (Reputation, service quality, perceived value, trust, and
customer satisfaction) are not highly correlated with each other. Thus, no multicollinearity
problem exists in this study.
The P-value of all variables was less than 0.0001 in this study, which met the requirements (less
than 0.05). Therefore, there is a significant correlation between independent variables
(reputation, service quality, perceived value, trust, and customer satisfaction)
4.6 Multiple Regression Analysis
Table 4.19: Model Summary
MODEL SUMMARY
Model R
R square Adjustment R Square Std. Error of the
Estimate
1 .850a .722 .712 .33064
Table 4.20: ANOVA
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ANOVAb
Model Sum of Sruares Df Mean
Square
F Sig,
Regression 41.419 5 8.284 75.774 .000a
Residual 15.961 146 .109
Total 57.380 151
Referring to the Table 4:19 Summary Model, it shows that five independent variables
have been incorporated into the regression model and the results show that R = 0.850, which is
the result of the correlation of the five independent variables with the dependent variable. After
considering all previous inter-correlations, R Square of the model is 0.722, which means that the
independent variable has 72.2% influence on the dependent variable, that is customer loyalty.
F-test is used to test the simultaneous hypothesis or to see the effect of independent
variables simultaneously to the dependent variable. The test shows the value of F 75.774 and the
value of sig 0.000. Significant value 0,000 <0,05.
4.7 Coefficients and Hypothesis Testing
Table 4.5 Coefficient Table
Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) .119 .130 .920 .359
MREP * .218 .066 .229 3.280 .001
MSQ * .217 .057 .251 3.790 .000
MPV .064 .062 .072 1.019 .310
MTRU * .188 .051 .210 3.674 .000
MSAT * .271 .056 .279 4.846 .000
From the table above, all of the variables giving a significant and positive influences
except for “perceived value”. The third independent variable, which is considered a value, the
significance value has exceeded the 0.1 level, which is the minimum stage of significant value.
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The value of significance is 0.310 and has no level of confidence. Therefore, the hypothesis
Hypothesis 3 (perceived value) is rejected.
Chapter 5 :Discussion, Reccomendation, and Conclusion
5.1 Introduction
As the last chapter for this study, will be discussed about this study as well as provide
some recommendations for the graphic design company or organizational management to
achieve customer loyalty to their business. Limitations of the study will also be described in this
chapter. It will also be closed with a conclusion.
5.2 Research Result and Discusion
The analysis found that hypothesis 1 (reputation), hypothesis 2 (service quality), hypothesis 4
(trust), and hypothesis 5 (customer satisfaction) were supported while hypothesis 3 (perceived
value) was rejected at the 0.310 significance level. It was also found that among the five
independent variables, reputation is the best predictor of customer loyalty to the Grahic Design
Company in Indonesia.
A sample of 152 respondents was taken for this study. Samples taken from Medan city in
Indonesia. Questionnaires already beenspread to the sample and the results show that items in all
six variables are acceptable. Based on the correlation analysis, the results show that the six
involved variables are correlated to each other.
5.3 Recommendations of The Studies
Here are the recommendation results:
a. A good graphic design company should listen to customer feedback
b. Efficient in solving problems that may arise is an important thing owned by graphic design
company
c. A Graphic design company needs to have a good connection relationship with their customer
d. A graphic design company should treat all the customers as the same
e. Instead of asking “Customer Loyalty”, but “Loyal to the Customer”
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5.4 Limitation of The Studies
The research has a limited locations and also sample due to a focused group as well as limited
time. Literature review shows that satisfied customer will tend to be more loyal than the
customer that have not satisfied, that is the satisfaction basic foundation.Based on the existing
fact in Indonesia, many Indonesia are not familiar with English language. At the end of the result
study, it could be the answer of the questionaire by respondents is just a random (lack of
understanding by the respondents). The research study Need to have other factors to support the
research study in the future.
5.5 Conclussion of The Study
Here are the conclusiion of the study:
a. Graphic design company should build up a good reputation in the market and among the
people in a state or location
b. The graphic design company should fulfill every expectation from the customer together with
understanding their needs and wants
c. Customer not really concern about the price, if their found that reputation, service quality,
trustable, and satisfaction is good enough, they willing to deal with the graphic design company
d. Graphic design company must keep all their promising to the customer, and all the product or
service that customer need
e. Customer that have enough satisfaction with the graphic design company, they will come back
once they need the product or design from the graphic design company again for future
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